The primary purpose of this blog (Prithviraj Kothari - MD, RSBL | Bullion market blog) is to educate the masses of the current happenings in the Bullion world.
This blog contains my opinion, which is not to be construed as investment advices.
Information provided in these blogs is intended solely for informative purposes and is obtained from sources believed to be reliable

RSBL Gold Silver Bars/Coins

Wednesday, 27 December 2017

As the year comes to a close, let’s take a look back at the main gold trends this year, from the impact of US Federal Reserve interest rate hikes to widespread geopolitical uncertainty, how it performed and how the outlook is in 2018.

Though gold made double digit gains in some currencies, it did have a tough year. The precious metal has had some harsh criticism from the mainstream media and unfair comparisons to lubricious assets, such as bitcoin and US equities.

Few have acknowledged gold's impressive performance in the face of rising interest rates, tightening monetary policies and the ongoing equity bull market.

When we see gold’s performance over the past 12 months, I think it would be better to divide it over 4 quarters to get an enhanced understanding of gold, its performance and the reason behind its volatility.

Quarter 1- The main driving force for gold prices in this quarter was Trumps uncertainty.
Concerns about US President Donald Trump and anticipated rate hikes from the Fed caused worries, as did the Brexit process and European elections. All of those factors combined in the first three months of the year to drive the yellow metal’s price
During the first quarter, gold traded between $1,184.62 and $1,257.64.
The gold price made its eighth Q1 gain in 10 years in the first quarter of 2017, buoyed by safe-haven demand from anxious investors.
Early in 2017, GFMS noted a gradual rise in gold demand complimeeyed by a reduction in global mine output, resulting in smaller surplus in 2017. This supply demand gap further reflected a bright year for gold and gold stocks in particular in the first quarter.

Quarter 2- Herein steps the Fed, whose hawkish tone influences the market and gold prices in particular.
The gold price stalled in the second quarter of the year as concerns about geopolitical tension faded away. The Fed increased interest rates for the second time of the year in June — that hurt the yellow metal as gold is highly sensitive to rising rates.
Demand for gold dropped 14 percent year-on-year in the first half of 2017 due to a sharp fall in ETF inflows, according to the World Gold Council (WGC). Total global demand for gold reached 2,003.8 tonnes from January to June, down from 2,318.7 tonnes in the same period the year before.
The yellow metal traded between $1,218.80 and $1,293.60 during the quarter.

Quarter 3- a Series of uncertain events leading to geopolitical crisis once again put gold on the top list of safe haven assets.
The gold price gained more than 3 percent in the third quarter, even though September was one of its worst months of the year.
A weaker US dollar and geopolitical tensions between the US and North Korea supported gold over the quarter. Gains were offset by the Fed’s hawkish tone, which pointed to another interest rate hike later in the year and three more in 2018.
At the end of the quarter, most analysts agreed that worldwide political developments, as well as the US dollar, were set to be key drivers for the gold price for the rest of the year.
Gold traded between $1,212.20 and $1,348.60 during the quarter.

Quarter 4- The most awaited Fed meeting becomes the focus globally.
The gold price remained almost neutral in the last quarter of the year, and was on track for a quarterly loss of less than 1 percent. Trump’s new Fed chair nomination and the expectation of another rate hike in December were some of the key factors driving prices during the period.
The yellow metal has been trading between $1,285.50 and $1,298 during the quarter.
So as we saw that in spite of witnessing volatilities, 2017 was a tough yet good year for gold.
Now what we need to pay heed to is that whether the above mentioned factors will continue to influence gold in 2018 or do we have many more surprise for the yellow metal in the following year-

The gold price is likely next year to continue the rise it commenced two years ago. The main contributory factors here remain the extremely

Political uncertainty is also likely to be a constant feature throughout the year. One example worth mentioning is the difficult process of forming a government in Germany, the outcome of which remains unclear. Parliamentary elections will probably be held in Italy in the spring of 2018 and could spark renewed unrest in the Euro zone

Brexit is likely to become an increasingly hot topic during the course of the year if agreement is still not reached in the negotiations between the EU and the UK and the UK’s disorderly exit from the EU becomes more likely in the spring of 2019.

That the second year of Donald Trump’s presidency in the US will run any more smoothly in terms of domestic or foreign policy than the first one did.

The implementation of the tax reform and the possible implications for monetary policy are likely to keep the market just as much on tenterhooks as the ongoing investigations into contacts between Trump’s election campaign team and Russia.

A prediction of the future approach of the Fed towards the monetary policy gets difficult as, Trump will next year make several new appointments to the Fed’s Board of Governors.

What is more, midterm elections to the US Congress will be taking place in the autumn of 2018, which is likely to increase pressure on Trump and the Republicans to implement the tax reform. Otherwise there is a risk of the high-flying US stock markets correcting, which would benefit gold

The numerous geopolitical crises should likewise generate latent uncertainty. These include in particular the North Korea conflict, the growing tensions in the Middle East between Saudi Arabia and Iran, and the conflict between the West and Russia over Russian influence in the US elections and in Eastern Ukraine.

Admittedly, the Fed has already raised interest rates twice this year, and is likely to do so for a third time in mid-December. Our economists expect three further rate hikes next year. However, this does not necessarily preclude a rising gold price, as 2017 has shown. This is because other central banks apart from the Fed – such as the Bank of England and the Bank of Canada – have also increased interest rates in the meantime, which reduces the benefits of the rate hikes for the US dollar.

Physical gold demand should generate somewhat more tailwind next year. It was fairly subdued in 2017. The World Gold Council (WGC) expects gold demand in India ultimately to reach a mere 650-750 tons after a strong first half of the year, putting it at a similarly low level as last year. Demand fell away when a goods and services tax was levied on gold purchases with effect from 1 July.

Gold ETFs On balance, ETF investors have hardly bought any gold at all since the end of September. By contrast, the world’s largest gold ETF – the SPDR Gold Trust that is listed in the US – recorded only minor net inflows. The numerous uncertainties and low real interest rates suggest that we will also see net inflows into gold ETFs in 2018. How pronounced these turn out to be will depend to a large extent on whether stock markets continue to fly high or whether they correct.

Numerous political uncertainty factors in Europe and the US, as well as a number of potential sources of geopolitical crisis, are likely to boost demand for gold additionally. Gold demand in Asia should have bottomed out and increase moderately in 2018. The gold price is likely to rise during the course of the year and to be trading at $1,350 per troy ounce by the end of 2018.

One risk factor for gold is the US tax reform. If this is fully implemented, the rally on the stock markets could continue, meaning that gold is in less demand accordingly.

So as we always say, gold is expected to have its share of highs and lows in 2018 and of the influencers discussed above, which happens first and how severely it happens will decide the fate of the yellow metal.

Wednesday, 31 May 2017

It was strong opening for gold this week as gold neared its highest in a month on Monday amongst holiday thinned trade. A soft dollar and a pullback in equities helped this rise in gold prices.

Gold hit its highest level since May 1 on Friday at$1,269.50 an ounce, as nervousness over U.S. President Donald Trump's negotiations with other world leaders at the G7 summit prompted investors to buy bullion as an alternative to nominally higher-risk assets such as shares.

Spot gold settled at $1,266.67 an ounce, little changed from $1,266.66 late on Friday.
Though there is not much rise expected in gold prices, but the news from G7 meeting pushed gold prices up.

Under pressure from the G7, Trump on Saturday backed a pledge to fight protectionism but refused to endorse a global accord on climate change, saying he needed more time to decide.

Apart from this, market players await next month’s FOMC meeting to get clearer picture on the U.S. Federal Reserve's stance on interest rate increases.Gold is highly sensitive to rising U.S. rates, which
Increase the opportunity cost of holding non-yielding bullion, While boosting the dollar, in which it is priced.

Meanwhile this week, market participants will stay focused on the labor market report in the US slated to release during the week. If the data turn out to be positive, there is probably nothing to prevent the (Fed) implementing its next rate hike in mid-June.

The latest FOMC minutes suggest that the Fed may start decreasing its balance sheet later this year.
It is true that the first two rounds of quantitative easing were positive for the gold market. However, the third one was a disaster for the yellow metal, as the confidence in the U.S. economy came back and the safe-haven demand for gold declined. Therefore, the impact of the unwinding of the Fed’s balance sheet on the gold market is not easy to determine – a lot will depend on the broad macroeconomic picture.

On the one hand, the Fed’s shrinking balance sheet would imply rising long-term real interest rates, which would be negative for gold prices. On the other hand, there may be some turmoil in the financial markets, which would support the gold market. Moreover, it may be the case that the U.S. dollar rally which started in 2014 was caused by the rising expectations about the Fed’s upcoming tightening.

If this is true and investors really bought the rumor and sell the fact, then the greenback may start depreciating, which would likely send the price of gold higher. Gold’s response to the current Fed’s tightening cycle suggests that it is not impossible scenario. However, the whole process is likely to be conducted in a very conservative and cautious way to minimize market volatility and disruption. Hence, investors should not bet on doom scenarios and expect that the price of gold will necessarily skyrocket.

Though gold was not preferred in an investor’s portfolio during 2016, it gold regained investor confidence during 2017, as doubts about the Trump’s administration’s ability to see through their policy agenda and political difficulties have emerged. Moreover, there has also been a number of geopolitical events such as European elections – the results in France and Netherlands have somewhat assuaged financial markets – and the flash point in the Korean peninsula.”

These geopolitical tensions and uncertainties have influenced gold prices.

The spot price of gold jumped nearly 2% on the 17th of May, the most significant daily increase since the Brexit vote on May 2016. Political developments will be closely watched by the market, and could be a potential driver of additional uplift in gold prices going forward.

Comments by St. Louis Fed President, James Bullard, that inflation remains subdued, and the Fed’s interest rate expectations might be too aggressive, have also been supportive of gold.

Gold is expected to hover around USD 1250 an ounce and is further expected to range between USD $1245 to USD $1300 over 2017-18.

Monday, 27 March 2017

Gold rose by 15 dollars last week from $1229 to $1244 having hit a high of $1252 and a low of $1227. Silver rose by 41 cents from $17.36 to $17.77 having reached a high of $17.78 and a low of $17.33. The dollar index stands at 99.62 that’s down 0.68 on the week. Gold prices moved higher as the Euro gained traction and the dollar edged lower following stronger than expected German PMI data. Analysts believe that gold has further to rise but will be seesawing between $1230- $1260 before perhaps it breaks out up to $1280 levels.

Silver markets were also positive last week and is attempting to reach $18 level. Similar to gold we see a see saw effect between the price range of $17 where there is significant support and the $18 level where there is resistance. As I have mentioned in my previous blogs that political uncertainty could have a greater effect on prices primarily because of their effect on the value of the dollar which actually fell a little during the week. Also a fall in the Dow enabled funds to be moved out of equities and back into gold, though to be fair this transference was relatively small.

Gold prices finished higher on Friday to log a second weekly gain in a row as demand for assets perceived as risky waned and the U.S. dollar touched its lowest level in about seven weeks.
Traders also eyed developments tied to a Republican-backed U.S. health-care bill, which could have wide-ranging influence in financial markets.

The main focus globally was on a vote by the U.S. House of Representatives on a bill to abolish the Affordable Care Act, also known as Obamacare. The vote was expected late Thursday, but was postponed by the Republicans when there were serious doubts the Republicans had the votes to strike down Obamacare. After negotiations between the Trump administration and members of the House Thursday, President Trump took a hard line and declared the vote should take place Friday, or he would move on to other matters and leave Obamacare in place. There is no clear consensus in the marketplace on the outcome of this key vote, which could move markets in its immediate aftermath.
A “no” vote on the House bill would likely favour the gold market bulls, as it could put downside pressure on the U.S. stock market.

Gold could back off and The U.S dollar is expected to strengthen and bonds yields should rise if the health care bill gets passed. The main reason being that the markets will see it as one hurdle out of the way for finally moving onto tax reform and other fiscal stimulus measures.

But if it happens otherwise and if the bill doesn’t get passed then gold is quote likely to rise.
On Friday, St. Louis Fed President James Bullard said U.S. labour market improvement is slowing down. U.S. data on core durable goods has shown that the economy is strong, but this is not something which is going to excite the Fed that much.

The U.S. data released was as follows

The Department of Commerce said new order of durable goods increased by $3.9 billion or 1.7% to $235.4 billion last month, following January’s revised 2.3% increase. According to consensus forecasts, economists were expecting to see a 1.1% rise.

Stripping out the volatile transportation sector, new orders of core durable goods rose 0.4%, in February, following January’s revised increase to 0.2%. Economists were expecting to see an increase of 0.5%.

The political uncertainties over in Europe around French elections and Brexit are going to provide a lot of tailwinds for the gold rally .

Analysts believe that the short term outlook for gold is positive as it will rise and shine amidst all the volatility and uncertainty prevailing. The coming week, US durable goods orders and housing sales will be announced. Globally reports on Japanese trade and UK inflation could also influence the currency markets and so it is possible that the dollar may lose a little ground against the Sterling and the Euro as it did last week. So this week we are positive for gold and silver while the limits mentioned are tested. What also needs to be focused is the divergence between the Fed’s growth forecast of 2% and President Trumps envisaged plans for a 4% economy growth rate. Time will tell which of the two proves to be more accurate.

Wednesday, 1 March 2017

So Far, bullion has witnessed a 9.6 percent rise in prices mainly due to the prevailing political uncertainty over Trump’s unorthodoxy, European elections and Brexit ruffle confidence.
The yellow metal reached near a four month high last week amid intensified political uncertainty in the U.S. and the EU.

All precious metals have made gains, gold, silver, platinum and palladium, as both the euro and the dollar weakened over the week. Let's take a look as to what factors contributed to the rise and how far an important role will they play in the near future.

US uncertainty- Gold prices have hit a four month high to reaching their highest level since Donald Trump won the election.

The metal is considered as a safe haven asset for money and values rise when markets are in turmoil or in times of uncertainty. This sentiment has raised the demand for gold especially from investors thus pushing its prices higher.

As markets await a major speech by US president Donald Trump, we saw equates retreating and dollar hesitating thus strengthening gold prices and shaking off most of the losses incurred following the surprise election result, as markets continue to unwind Trump trade.

Fed Rate Hike- Last Wednesday's release of minutes from the last FOMC meeting on January 31 – February 1 struck a slightly more hawkish tone as Fed members discussed the appropriateness of another rate hike 'fairly soon.' concerns over the risks and uncertainties surrounding the Trump Administration's fiscal stimulus plans as well as a strengthening US dollar tempered that hawkish stance. In the end, markets were once again left with continued ambiguity regarding the pace of monetary policy tightening in the coming months. Indeed, the Fed Fund futures market still saw a low percentage probability of a March rate hike – in the high-teens to low-20's – a day after release of the FOMC minutes. This sustained policy uncertainty helped weigh on the dollar while boosting the price of gold further. Reduced expectations of a US rate hike in March following the release of the minutes from the US Federal Reserve's last meeting are also helping gold.

EU elections- Despite the virtually relentless rally in US and global equity markets, geopolitical risks continued to abound, particularly in Europe. Article 50, which officially begins the process of separation between the UK and European Union ('Brexit'), is slated to be triggered no later than in March. A former European Commission official has recently stated that the triggering of Article 50 could lead to a 'complete breakdown' of UK/EU relations.

Additionally, France's far-right, anti-EU presidential candidate, Marine Le Pen, is leading in polls for the first round of the upcoming French elections. Although she is not currently favored to win against frontrunner Emmanuel Macron, any surprise victory by the populist/nationalist Le Pen will undoubtedly lead to serious questions about the future of the EU.

Geopolitical worries and political concerns in the EU continue which is leading a flight to safety bid in gold futures market and gold exchange traded funds (ETFs) and demand for safe haven gold bullion.

Dollar- The dollar looks vulnerable due to the uncertainty about US President Donald Trump and the new U.S. administration's policies. Overnight Trump attacked China and accused the Chinese of being ‘grand champions’ of currency manipulation.

This alone is quite bullish for gold. It does not create confidence about trade relations between the world's two biggest economies and it suggests that we may be about to embark on the next phase of the global currency wars.

The US president is to deliver his first speech to US Congress next week, after US Secretary of the Treasury Steven Mnuchin on Thursday said the impact of fiscal stimulus this year on the economy might be limited.

Amid these uncertainties in Europe as well as those in the US under the Trump Administration's still-hazy policy trajectory and the Fed's murky monetary policy, gold has continued to extend its sharp uptrend that began after price bottomed out around the $1125 support area in late December.

Thursday, 12 January 2017

Until Wednesday last week, gold was trading in positive territory continuing the rally from the previous session.

The spot gold price was quoted at $1,164.85/1,165.15 per oz, up $8.05 on the previous close.

There were many supporting factors for gold’s rally-

Mainly all the uncertainty that lies ahead with the changeover in the US administration

Brexit

The weakening trend in the yuan.

On Friday last week, gold slipped following the release of strong US employment data which was as follows-

The USA added 156,000 jobs in December, compared with 204,000 in November, while wages grew 2.9% year-on-year to reach a seven-year high.

German industrial production climbed 0.4%, which was down from the 0.7% expected, while the country’s trade balance climbed more than expected.

The non-farm employment change for December showed 156,000 Americans entered the workforce, a slight miss from the 175,000 forecast.

However, the figure for the previous month was revised up 19,000 jobs and the headline unemployment figure came in as expected at 4.7%.

The big surprise was that average hourly earnings grew by 0.4% month-on-month, bringing total wage growth to 2.9% for the year and the highest level since before the recession.

Gold prices were in positive territory in London on the morning of Monday January 9, recovering slightly from last week’s drop.

The spot gold price was recently quoted at $1,176.20/1,176.50 per oz, up $3.40 on the previous close. Trade has ranged from $1,172.50 to $1,178.75. Gold prices edged up in a technical rebound on Monday after one-month highs hit last week were undercut by the prospects of more interest rate hikes from the US Federal Reserve.

US employment increased less than expected in December but a rebound in wages pointed to sustained labour market momentum that sets up the economy for stronger growth and the prospect of further interest rate increases this year.

Chicago Federal Reserve President Charles Evans said on Friday the central bank could raise interest rates three times this year, faster than he had expected just a few months ago.

Evans and other regional Fed presidents are scheduled to speak this week, and the outlook for U.S. rates may become even clearer when Chair Janet Yellen appears at a webcast town hall meeting with educators on Thursday.

Expectations of US interest rate hikes lowers demand for the non-interest-paying bullion.
Apart from a rate hike the most discussed r rather the most awaited topic currently is the fiscal stimulus that Trump is promising and, of course, inflation.

Despite the rebound in the dollar, gold prices are holding up well – all thanks to the safe haven move by investors, just ahead of the shift in US administration.

By the end of 2016 or rather post the 2016 US election, confidence in the global markets was running high thus propelling gold to lose its safe haven appeal. But 2017 has lot of uncertainties and surprises to unfold for gold which will once again get into the investors basket keeping in the mind its appeal as a safe haven asset in times of global uncertainties.

In the week ahead, investors will be looking ahead to US economic reports, particularly Friday’s retail sales figures for December. Investors will also be watching an appearance by Fed Chair Janet Yellen on Thursday and speeches by a handful of other Fed officials during the week, as well as President-elect Donald Trump on Wednesday for a press conference.

Now investors await the upcoming inauguration of President-elect Donald Trump to see what the volatile leader will implement once in office.

Speculative funds as well as
ETF investors have flocked into gold in search of yield

Though
2016 has been one of the best performing years for gold since 2012 the yellow metal registered its biggest daily drop in three years on last Tuesday and
extended losses in the previous session after forecast-beating U.S.
manufacturing data and comments from Fed officials saying there was a strong
case for raising rates.

Gold fell
for the eighth straight session on Thursday, slipping to a four-month low,
pressured by a stronger dollar after U.S. weekly jobless claims fell and ahead
of key data that could put the Federal Reserve on track to raise interest rates
this year.

Gold fell
for a ninth straight session on Friday on a stronger dollar ahead of key U.S.
jobs data and the metal was headed for its worst weekly dip in over three years
on increased expectations of a Federal Reserve rate rise by year end.

Initial
claims for state unemployment benefits unexpectedly declined by 5,000 to a
seasonally adjusted 249,000 for the week to Oct. 1. The U.S. dollar .DXY rose
to the highest in more than two months against a basket of currencies as the
data reinforced the view that the Fed would raise rates at the end of the year

This
declined gold prices drastically but by the end of Friday gold futures staged a
modest recovery amidst all these concerns.

Though the unemployment benefits declined, a slow growth rate
was recorded for the third straight month in September. Gold prices got an
initial boost from this.

In Europe, the European Central Bank (ECB) intends
to push on with its aggressive stimulus policy of negative interest rates and
massive bond buying until it is happy with the outlook for euro zone inflation,
senior officials said. ECB Vice President Vitor Constancio said a Bloomberg report
suggesting that there was already consensus among ECB rate setters to reduce
the 80 billion euros ($89 billion) monthly bond purchases was mistaken.

The report aggravated a sell-off in gold on Tuesday
as the yellow metal fell over three percent to its worst one-day fall since
September 2013.

In the
short term, gold prices might remain under selling pressure. While the metal
could consolidate lower and put the bulls to the test, it remains to be seen
how long or deep the consolidation process will be. But we remain friendly
towards gold – our medium-to-long-term view remains bullish and we could see
the metal seeking a strong technical support to rebound into.

But there
are chances that gold might trade sideways in the short term keeping in mind
the following factors-

Strained projected longs
show that this trade is very much overcrowded. With no fresh buyers, the
path of least resistance is downward

Profit-taking could be a
theme and, should panic ensue, panic selling could escalate as speculators
and ETF investors are sitting on large unrealised profits

The bulls’ bounciness has
not really been tested and a mild correction/pullback should do the
overall bull structure a lot of benefit

Physical demand has been subdued
due to high future prices – the current rally has not had the backing of
strong physical up-take

The Fed has armed its
policymakers to prepare the market with combative messages that the US
economy is primed for a 25-basis-point-rate rise before the end of 2016

These put
a limitation to the bullish trend for gold. Nonetheless as we approach towards the
last quarter of 2016 we all hope that it ends on a similar note as its
beginning.

The primary purpose of this article by Mr. Prithviraj Kothari is to
educate the masses of the current happenings in the Bullion world.

Tuesday, 27 September 2016

Bullion has rallied 26 percent in 2016, recovering from three years of
losses, as low or negative interest rates have strengthened demand. Political
uncertainty has also played a part, with the U.K.’s vote to quit the European
Union spurring haven demand. Forecasters including Singapore-based DBS Group
Holdings Ltd. have said that the U.S. contest may buttress prices amid concern
about the possible implications of a Trump presidency.

Gold may be in for a bumpy ride in the final quarter as Republican candidate
Donald Trump now has a 40 percent chance of winning the presidential election
and investors will be preparing for the possibility of higher U.S. interest
rates, according to Citigroup Inc. A probable victory of Donald Trump increases
the chances of a single U.S. hike by the end of 2016.

But if it happens otherwise, then gold prices are likely to steady during
25-29 September after the US Federal Reserve decided to leave interest rates
unchanged, according to analysts.

Bullion has been provoked from inertia after Fed rate concerns had helped
wipe out gains for the quarter.

There is once again an inflow of capital in the market as low borrowing
costs in the U.S. and economic stimulus by central banks from Japan to Europe
drive demand for the precious metal as a store of value.

Over the previous week, gold achieved the best performance since July 2016
with a 2.4% rise, while the US dollar index recoded the worst performance,
reaching 95.472 against a basket of currencies.

The precious metal is heading for the biggest weekly advance since July
after U.S. central bankers opted to leave interest rates unchanged while
reining in their outlook for future increases.

Gold prices edged lower on Friday, but notched the strongest weekly advance
in almost two months after the Federal Reserve held off on raising interest
rates and scaled back the number of rate hikes it expects next year.

This has once again pushed gold prices upwards and traders are no into the
buy-and-hold mode for gold.

The precious metal is sensitive to moves in U.S. rates, which lift the
opportunity cost of holding non-yielding assets such as bullion. A gradual path
to higher rates is seen as less of a threat to gold prices than a swift series
of increases.

Meanwhile, investors will be focusing on a series of important events lined
up this week that play a pivotal role in influencing gold prices.

A pair of speeches from European Central Bank President Mario Draghi is to
testify before the Committee on Economic and Monetary Affairs of European
Parliament, in Brussels.

For fresh hints on whether the ECB will step up monetary stimulus in the
coming months to boost inflation and prop up the economy.

Speech by Bank of Japan Governor Haruhiko Kuroda will be eyed in wake of
last week's decision by the BOJ to modify its policy framework

Focus will also be maintained on the first U.S. presidential debate on
Monday between Democratic nominee Hillary Clinton and Republican hopeful Donald
Trump

Other speeches to be given by

-Swiss National Bank Chairman Thomas Jordan

-Bank of Canada Governor Stephen Poloz

-Federal Reserve Vice Chair Stanley Fischer

-BoJ Governor Haruhiko Kuroda is to speak in Tokyo.

U.S. is to release data on new home sales, private sector data on consumer
confidence, publish data on durable goods orders, to publish final figures on
second quarter growth

Fed Chair Janet Yellen is scheduled to testify before the House Financial
Services Committee on regulation and supervision, while St. Louis Fed chief
James Bullard is to speak in St. Louis.

The Bank of Japan's big policy review is likely to see more QE and negative rates
in the long run.

Germany is to publish preliminary inflation data and a report on
unemployment change.

Japan is to release data on inflation and household spending.

China is to publish its Caixin manufacturing index.

Germany is to release data on retail sales.

The U.K. is to report on the current account and publish revised data on
second quarter growth.

The euro zone is to release preliminary data on consumer inflation.

Canada is to publish data on economic growth.

The U.S. is to round up the week with data on personal income and spending,
a report on business activity in the Chicago region and revised data on
consumer sentiment.

Nowthat series of
events are scheduled for the week we expects markets player to be alert and
markets to be volatile.

The primary purpose of this article by Mr. Prithviraj Kothari is to
educate the masses of the current happenings in the Bullion world.

Monday, 19 September 2016

Recently gold has been
struggling to climb up due to the recurrent changes in the expectations of an
interest rate hike. There is quite a possibility that market players are paying
too much heed to the whole interest rate scenario and in turn missing on the bigger
picture.

Nonetheless, Gold continues to work lower
alongside the rest of precious metals – a resilient dollar and rising US real
rates have prompted traders to unwind their long positioning. Investors have become
increasingly edgy ahead of the conclusion of the Fed and the BoJ meetings

Spot gold
was last at $1,314.66-1,315.00 per ounce, down $1.17 from Thursday’s close.

The spot
gold price had tumbled to a week’s low of $1,307.75 on Thursday on selling
pressures following a brief spike to $1,328.10 sparked by weak US retail sales
data.

In data
released Thursday-

US retail
sales in August undershot at -0.3 percent

Core retail
sales in August undershot at -0.1 percent.

Industrial
production month-over-month in August also disappointed at -0.4 percent

The US PPI
in August was unchanged; a 0.1-percent gain from the previous month has been expected.

The core PPI
– excluding food and energy costs – was in line at 0.1 percent.

The Empire
State manufacturing stood at -2.0 missed the expected -0.9

The Philly
Fed manufacturing index at 12.8 beat the predicted 1.1.

Capacity
utilization rate in August stood at 75.5 percent, a touch below the 75.8
percent

Weekly
unemployment claims for September 1-8 in at 260,000 were just below the
forecast 262,000 and, more importantly, the psychological 300,000 mark.

Lastly, the
current account balance in June was in line with consensus at -$120 billion.
Business inventories month-over-month was unchanged in July, missing the 0.1
percent forecast.

There was disappointment
in the markets when the data was released that showed signs of a softening US
economy,.aThe US economy has recently shown signs of softening – data including
retail
sales, its PPI and industrial
production have undershot.

While
disappointing numbers have lowered the likelihood of an imminent Fed rate
increase - for September was just 12 percent, November was 19.3 percent and
December was 46.2 percent. Earlier this week, majority had expected a rate hike
in December.

With such
soft data coming in from the US, expectations have largely diminished towards
the Fed doing anything in September and the market is drifting back towards the
view they might do nothing for quite a while.

Some even
feel that markets are overeating to a potential rate hike and giving too much
attention to it, thus ignoring other crucial factors that have the potential to
influence gold prices.

The market
is once again divided between the supported of bulls and bears for gold. The
ones that are bullish are not worried about gold’s recent downtrend. What is the most important factor for investors is
that the gains seen so far are sustainable and that gold has more or less
stabilised before it takes that long jump to rally.

They believe Fresh disappointing US data has
reinforced our view that the Fed should remain on hold in September, resulting
in renewed weakness in the dollar and US real rates and prompting fresh buying
in gold.Moreover, demand
for gold from China and India is expected to rise over the months to come which
will further boost gold prices higher. The market ismoving towards to a festive season and this
period of the year has generally seen demand for gold rising and this rise in
demand will make up for the weakness gold has faced over 2016.

Given that
gold is heavily influenced by fluctuations in the dollar and US real rates, we
are not surprised by the metal continuing to weaken. But the bullish supporters
for gold also believe that this weakness is temporary and is currently driven
by a stronger dollar and higher US real rates

Our
big-picture outlook remains bullish but more profit-taking could easily be
triggered if the price action disappoints, as it may be starting to do.

The primary purpose of this article by Mr. Prithviraj Kothari is to
educate the masses of the current happenings in the Bullion world.